Blue chips fell, while the Nasdaq finished slightly higher in light volume Friday ahead of the holiday weekend. Oil prices recovered from a steep slide Thursday, but July crude stayed below $40. The latest economic reports were mixed.
The Dow Jones industrial average fell 16.75 points, or 0.16%, to 10,188.45. The Nasdaq composite index rose 2.24 points, or 0.11%, to 1,986.74. The broader Standard & Poor's 500-stock index was down 0.64 points, or 0.06%, at 1,120.64.
In economic news Friday, the University of Michigan consumer sentiment index dropped sharply to 90.2 in May from 94.2 in April. The data suggest high oil prices and renewed geopolitical concerns are taking a toll on sentiment, says economic research outfit Action Economics.
The Chicago PMI manufacturing survey surged to 68.0 in May from 63.9 in April, much stronger than the consensus of 62.0, and should generate added volatility in the markets, says Action Economics.
Personal income rose 0.6% in April, while personal spending rose 0.3%.
"Every positive report this week seemed to have a matching negative, but overall the data suggest the economy is cooling off after its March surge," wrote Standard & Poor's chief economist David Wyss in a report Friday. "The declines in new home sales and especially durable orders suggest that the spring spurt is winding down." He says growth is expected to remain strong, but not as strong as the reports in March suggested.
Wyss also notes that the revision of first-quarter gross domestic product growth to 4.4% from 4.2% is actually negative for future growth. Inventories were revised upward, showing more goods on the shelves, which is a negative for future production, he says. Higher imports reveals continued U.S. trade problems, Wyss says. In addition, government spending was revised higher and capital spending downward -- another negative for future growth, he says.
The key number for the Federal Reserve is the June 4 employment report, Wyss says. Economists expect 215,000 payrolls to be added, and the unemployment rate to remain at 5.6%. "Unless there is a major negative surprise, however, the Fed will move a quarter point" at the June 29 and 30 policy meeting, Wyss says.
Other economic reports after Monday's Memorial Day holiday include the Institute for Supply Management's national manufacturing survey and construction spending on Tuesday. On Thursday, weekly jobless claims, factory orders, and the ISM non-manufacturing reports are due.
Companies on the earnings calendar next week include Albertson's (ABS ), Seagate Technology (STX ), Mandalay Resorts (MBG ), CSK Auto (CAO ), and Piedmont Natural Gas (PNY ).
In Friday's market action, there was a reversal of Thursday's sector movements: tobacco, metals, and pharmaceuticals stocks were falling, while oil sectors were rising.
Among companies reporting earnings, Chico's FAS (CHS ) posted first-quarter earnings per share of 40 cents, vs. 27 cents a year ago, on 20% higher same-store sales and 52% higher total sales. The clothing retailer says May comp sales growth is currently in the high teens.
In tech, Novellus Systems (NVLS ) was up on the chip equipment maker's raised guidance for the June quarter.
Intel (INTC ) shares rose after Banc of America says it views the recent stock price weakness as a buying opportunity; it has a $35 12-month price target.
Anheuser-Busch (BUD ) shares advanced after Morgan Stanley upgraded them to overweight on the belief that they are trading at an attractive entry point, with a favorable risk/reward trade-off.
In merger news, Coeur D'Alene Mines (CDE ) offered to acquire Wheaton River Minerals (WHT ) in a stock and cash deal valued at about $1.8 billion, or $3.28 per Wheaton share.
Golden Star Resources (GSS ) says it has offered to acquire IAMgoldCorp (IAG ) for 1.15 GSS shares for each IAG share held.
Treasury prices fell after Thursday's rally -- the yield on the 10-year note creeped up to 4.66%.
European stock markets finished lower following news that Eurozone inflation rose to a 2-year high. London's FTSE 100 index was down 22.9 points, or 0.51%, to 4,430.7.
Germany's DAX index lost 10.61 points, or 0.27%, to 3,902.72. In Paris, the CAC 40 index fell 27.34 points, or 0.74%, to 3,652.03 following reports French consumer confidence fell to 3-month low in May, while April unemployment rate was unchanged at 9.8%.
Asian markets finished higher. In Japan, the Nikkei index rose 143.54 points, or 1.29%, to 11,309.57, cheered by a series of strong economic data. Banks and retailers trended higher on news that household spending rose, while tech stocks climbed following a record year-over-year rise in industrial output of 8.5% in April. Average spending by Japanese wage earner households rose a real 7.2% year-over-year in April, while nationwide core CPI fell 0.2% year-over-year. Japan's seasonally-adjusted unemployment rate was 4.7% last month, unchanged from March.
In Hong Kong, the Hang Seng index gained 132.97 points, or 1.11%, to 12,116.87. China plays led advances as worries about economic overheating in the country subside, says Standard & Poor's MarketScope. Property names extended gains on optimism for price increases in Hong Kong's housing market following a successful public land auction early this week.